nep-neu New Economics Papers
on Neuroeconomics
Issue of 2020‒08‒31
four papers chosen by

  1. Are Personality Traits Really Fixed and Does It Matter? By Steven Stillman; Malathi Velamuri
  2. Can Early Intervention have a Sustained Effect on Human Capital? By Orla Doyle
  3. Risks on Others By Takaaki HAMADA; Tomohiro HARA
  4. Present Bias for Monetary and Dietary Rewards: Evidence from Chinese Teenagers By Cheung, Stephen L.; Tymula, Agnieszka; Wang, Xueting

  1. By: Steven Stillman; Malathi Velamuri
    Abstract: A nascent but burgeoning literature examines the importance of non-cognitive skills in determining success across many facets of life. The majority of these papers treat these skills as fixed traits for adults. We estimate the impact of a number of life events on the Big Five personality traits and locus of control. A subset of life events have large impacts on these non-cognitive skills, especially on locus of control. For some events, these impacts persist in the medium-run. We then demonstrate that treating personality traits as fixed can lead to biased estimates of their relationship with socioeconomic outcomes.
    Keywords: personality, non-cognitive skills, life events, fixed traits
    JEL: J24 C18
    Date: 2020
  2. By: Orla Doyle
    Abstract: Evidence on the sustained effect of early intervention is inconclusive, with many studies experiencing a dissolution of treatment effects once the program ends. Using a randomized trial, this paper examines the impact of Preparing for Life (PFL), a pregnancy to age five home visiting and parenting program, on outcomes in middle childhood. We find little evidence of cognitive fade-out at age nine, with significant treatment effects on cognitive skills (0.67SD) and school achievement tests (0.47-0.74SD) that are of a similar magnitude to those observed at the end of the program. There is no impact on other school outcomes and earlier effects for socio-emotional skills are no longer evident. While about 50 percent of the sample is retained at age nine, the treatment groups are still balanced on all key baseline characteristics and the results are robust to inverse probability weighting. Mediation analysis suggests that ~46 percent of the treatment effect on cognitive skills is explained by improvements in early parental investment. This study demonstrates that boosting children’s early cognitive skills can reduce school-age inequalities five years after program completion, yet continued investment may be needed to break long-standing inequalities in other dimensions of skills.
    Keywords: Early childhood intervention; Cognitive skills; Socio-emotional and behavioral skills; Randomized control trial; School-age inequalities
    JEL: C93 D13 I26 J13
    Date: 2020–04
  3. By: Takaaki HAMADA (Faculty of Management and Administration, Shumei University, Research Institute for Economics and Business Administration, Kobe University); Tomohiro HARA (Department of Economics, University of Maryland at College Park, U.S.A.)
    Abstract: We investigate other regarding preferences when others are involved in some risks. We introduce two concepts to examine risk attitudes towards others: "absolute level of risk attitudes toward others" (ARAO) which capture general risk attitudes toward recipients' risky payoffs, and "relative level of risk attitudes toward others" (RRAO) which capture behavioral difference depending on types of risks conditional on same expected outcomes. For RRAO, we compare two different types of risks: "state risk" where recipients' initial endowments are risky and "non-state risk" where recipients' states are not risky but transfers are risky. We provide a novel experimental design to measure both ARAO and RRAO, and theoretically explore potential mechanisms behind behaviors based on these concepts by extending representative inequality aversion models under risks. In our experiment, we find decision makers exhibit robust risk averse behaviors on ARAO, which cannot be predicted by existing theories. Yet, we find no strong evidence on RRAO.
    Keywords: Other-regarding preferences; Charity; Risk preferences; Cognitive bias
    Date: 2020–08
  4. By: Cheung, Stephen L. (University of Sydney); Tymula, Agnieszka (University of Sydney); Wang, Xueting (University of Sydney)
    Abstract: Economists model self-control problems through time-inconsistent preferences. Empirical tests of these preferences largely rely on experimental elicitation methods using monetary rewards, with several recent studies failing to find present bias for money. In this paper, we compare estimates of present bias for money with estimates for healthy and unhealthy foods. In a within-subjects longitudinal experiment with 697 low-income Chinese high school students we find strong present bias for both money and food, and that individual measures of present bias are moderately correlated across reward types. Our experimental measures of time preferences over money predict field behaviours better than preferences elicited over foods.
    Keywords: self-control, quasi-hyperbolic discounting, present bias, adolescents, food rewards
    JEL: C91 D12 D80 D91
    Date: 2020–06

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